e-journal

Lease and service for product life-cycle management: an accounting perspective

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Purpose – Previous research in lease finance and evaluation has given little consideration to
environmental factors. The purpose of this paper is to add to the literature by analysing how leasing
provides a more attractive option than selling and extended producer responsibility (EPR) in helping
to close product life-cycle loops, extend the useful life of products, and increase environmental benefits.
Design/methodology/approach – This paper revisits the accounting concepts of asset
depreciation, residual value and cost of leasing and proposes methods to incorporate these concepts
into the “closed loop” lease and service mode for product life-cycle management.
Findings – For business, the “closed loop” lease and service mode changes asset values through the
extension of the asset’s useful life and in particular, the increase of the residual value of the product
(i.e. recoverable value to the producer/lessor). Such changes reduce the cost of leasing to the advantage
of both lessor and lessee. However, the argument about a “win-win” monetary and environmental
outcome being associated with leasing presents several challenges for current accounting standards in
terms of recognition of lease and lease revenue, recognition of intangible assets and internalisation of
environmental costs and impacts associated with the leasing process.
Originality/value – To date, accounting and finance literature seems to focus exclusively on the
economic aspects of leasing strategies. This paper uses a different lens to make a call for a rethink
about leasing with environmental considerations. It is expected that the findings and suggestions in
this study will facilitate the adoption and diffusion of the “closed loop” lease and service mode in the
business world for the benefit of the environment in the future.

Keywords Leasing, Selling, Finance, Closed loop, Product life-cycle management, Residual value,
Accounting standards, Asset depreciation

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Informasi Detail

Judul Seri

International Journal of Accounting and Information Management

No. Panggil

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Penerbit

: Emerald Group., 2011

Deskripsi Fisik

International Journal of Accounting and Information Management Vol. 19 No. 3, 2011 pp. 214-230

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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